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Zynga confirms layoffs in Austin, elsewhere

Zynga confirms layoffs in Austin, elsewhere

Struggling game-maker Zynga has laid off employees across several studios including its operations in Austin and shuttered its Boston game studio on Tuesday.

The news spread across social media services and across the web as friends of employees affected fed video game news blogs and Twitter with details hours before the company acknowledged the moves.

In an internal note provided to the American-Statesman by Zynga, founder and chief executive Mark Pincus said the company is putting 13 of its games out to pasture and “Significantly reducing our investment in The Ville.”

“The Ville” was developed primarily in Austin and has been the subject of a lawsuit against the company from Electronic Arts, which says the game was similar to its own “The Sims Social.” Zynga has since counter-sued over an alleged hiring agreement.

In the note, Pincus said, “We are closing the Zynga Boston studio and proposing closures of the Zynga Japan and UK studios. Additionally, we are reducing staffing levels in our Austin studio. All of these represent terrific entrepreneurial teams, which make this decision so difficult. In addition to these studios, we are also making a small number of partner team reductions. In all, we will unfortunately be parting ways with approximately 5% of our full time workforce.”

The company declined to provide specifics on the number of layoffs in Austin. Zynga said it would provide some additional details in a post-earnings webcast on Wednesday and would have an all-hands meeting next week to discuss the company’s future.

According to reports in Forbes and the gaming blog Gamasutra and Arstechnica, among others, more than 100 employees in Austin in the divisions that made “The Ville” and casino-style casual games lost their jobs.

As recently as June, Zynga Austin had about 215 team members working on a variety of casino-style games as well as larger-scale games like “The Ville.” The company said at the time that Austin was its largest satellite branch in the United States.

Pincus said in the note that the reductions were, “…the most painful part of an overall cost reduction plan that also includes significant cuts in spending on data hosting, advertising and outside services, primarily contractors. These reductions, along with our ongoing efforts to implement more stringent budget and resource allocation around new games and partner projects, will improve our profitability and allow us to reinvest in great games and our Zynga network on web and mobile.”

Zynga, which has been hit by the decline of game-playing on Facebook and increasing competition, has seen its revenue decline as gamers have moved on to newer offerings on smart phones and other mobile devices. Zynga’s stock price has plummeted this year, and executives this month said they would be implementing cost cuts. The company has suffered financial setbacks since then, including departures from key staff members and a legal battle with EA.